Investing in a construction or development project means more than watching the numbers. Investors also need to understand the legal risks that can affect a project’s timeline, budget, and eventual value.
A construction dispute can begin with something that seems relatively minor, a contractor misses a deadline, work does not match the plans, or a subcontractor claims it has not been paid. But if the problem is not addressed quickly, it can become a much larger financial and legal issue.
For Florida investors, understanding the most common construction claims can help you recognize problems before they threaten the entire project.
What Is a Construction Claim?
A construction claim is essentially a legal demand arising from a disagreement about a construction project. It may involve money, defective work, delays, contract obligations, or the rights of someone who contributed labor or materials to the project.
Not every construction claim immediately becomes a lawsuit. Many are first addressed through contractual notice requirements, negotiations, mediation, or arbitration. The important point for an investor is that construction claims can affect the project even when the investor did not personally perform or supervise the construction work.
What Is a Construction Defect Claim?
A construction defect claim generally involves work that was not performed according to the applicable plans, specifications, building requirements, or contractual standards.For example, a project may have problems involving water intrusion, roofing, structural work, electrical systems, plumbing, windows, or other components.
The financial consequences can extend beyond the cost of fixing the defective work. Defects can cause delays, interfere with financing or a sale, reduce property value, and create disputes among owners, contractors, subcontractors, architects, and other parties.
Before assuming that a contractor is responsible, however, it is important to determine what the contract actually required and who was responsible for the particular work.
What Is a Construction Delay Claim?
Time is money in real estate development. When construction takes longer than expected, an investor may face additional interest, carrying costs, financing expenses, insurance costs, lost rental income, or a delayed sale.
A construction delay claim may arise when one party believes another party caused an unreasonable or contractually significant delay. The first question should not simply be, “Who caused the delay?” It should be: What does the construction contract say about deadlines, extensions, delays, and damages?
Contract provisions can determine whether a delay creates a valid claim and what remedies may be available.
What Is a Construction Payment Dispute?
Construction projects often involve multiple layers of contracts. An owner may hire a general contractor, who hires subcontractors, who may in turn hire suppliers or other subcontractors. That creates multiple opportunities for payment disputes.
An investor should take seriously any indication that contractors or subcontractors are not being paid. A payment dispute can potentially lead to a mechanic’s lien against the property.
Florida’s Construction Lien Law provides statutory rights to certain contractors, subcontractors, laborers, and material suppliers who meet the legal requirements for a lien. A lien can become a significant issue when an owner is trying to sell or refinance a property.
What Is a Mechanic’s Lien in Florida?
A Florida mechanic’s lien is a legal claim against improved property that may arise when qualifying parties are not paid for labor, services, or materials provided to the project. For an investor, this is important because the dispute may involve money the investor believes has already been paid to the general contractor.
That is why investors should not wait until closing to discover that someone involved in the project claims they are still owed money. Construction payment records, contracts, notices, lien documents, and deadlines can all become important when determining whether a lien is valid and how it should be addressed.
What Should Investors Do When a Construction Dispute Starts?
The worst time to start organizing your construction documents is after a lawsuit has already been filed.
When a dispute appears, investors should preserve the relevant contracts, change orders, invoices, payment records, project communications, plans, photographs, inspection reports, and notices.
It is also important to determine whether the contract requires a particular type of notice or dispute-resolution procedure before filing a lawsuit.
Depending on the circumstances, an investor may be dealing with several overlapping issues, including:
- Construction defects or incomplete work
- Project delays and additional costs
- Contractor or subcontractor payment disputes
- Mechanic’s liens
- Contract violations
- Construction fraud or misrepresentation
When Should an Investor Contact a Construction Lawyer?
You do not necessarily need to wait until a contractor files a lawsuit or a lien appears on the property.
If a project is experiencing serious delays, significant defective work, escalating costs, or disputes over payments, obtaining legal advice early can help an investor understand the contractual and financial consequences before the problem becomes harder to resolve.
For Florida investors and developers, construction law is closely connected to real estate law, contract law, and commercial litigation. A construction dispute can affect far more than the construction itself, it can affect the investment.
At Ayala Law, we represent property owners, investors, developers, contractors, and businesses in Florida construction disputes, including contract disputes, construction defects, mechanic’s lien matters, and construction litigation.
If a construction problem is putting your investment at risk, please don’t hesitate to contact one of our experienced attorneys at 305-570-2208.
You can also contact our team directly at: arianna@ayalalawpa.com
Schedule a case evaluation online here.
[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].
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